United States 2nd Circuit Court of Appeals decided March 2006
In Gibbs v. Cigna, the parties disputed whether the summary plan description reserved discretionary authority to the plan administrator. If so, the administrator’s decision would be reviewed on appeal under an arbitrary and capricious standard. If not, the plaintiff would be entitled to de novo review.
At issue in this case were two competing summary plan descriptions.
CIGNA argued that the language of the 1997 summary plan description vested sole discretion in the administrator. By contrast, the plaintiff argued that the 1995 summary plan description, which did not grant such discretion, controlled because that was the language in effect when the he became disabled.
The Second Circuit agreed with the plaintiff finding that “Gibbs was vested in his right to disability benefits prior to the amendment of the plan.” The Court went on to hold that a change in the discretion allocated to an administrator substantively affects a claimant’s rights to benefits. Accordingly, the Court found that such a change cannot be applied retroactively to a disability claim that has already vested. The district court opinion to the contrary was vacated and the case was remanded for further proceedings.